Apart from the hacking indecent they have a really good brand with a reputation for doing the right thing. They provide infrastructure as a service, the service is clearly defined and they deliver. Unless they are really sharp then a managed service is not going to be clean, It's full of grey areas and trade off's about whether the team gave correct advice or did the right thing. They should have spun this off to a separate company.
>There is no industry standard for what "managed" means.
Managing expectations here? really hard. Really, really hard. I mean, for $100/month, the provider is probably not going to be involved with the planning and day to day operation; this means you end up with setups where the customer builds a site, gets it working, starts depending on it, and then something horrible happens, and at that point, linode sysadmins will have to step in and fix it. I mean, yeah, a good sysadmin can usually pull it off, but it's "heroic" work, in my mind... You have to sit there and figure out all the weird hacks the last amateur the customer hired used to get the system working. if you ask me to do something like that, I'm going to set an expectation of failure. But that's the problem with managed services, the customer expectation is always success.
This will not be fun for the sysadmin involved. It's much harder to fix a system you are unfamiliar with than a system you are familiar with, and the customer is going to have expectations that the success rate will be as if the sysadmin was familiar with the system. (I mean, hell, I go way out of my way to tell people I sell completely unmanaged stuff, and I still get customers blaming me when their out of date php whatever gets compromised.)
The situations where I would be willing to offer a competing product would be if I could charge (and limit the customers per sysadmin) such that a member of my staff could have weekly or monthly meetings with the customer, going over their architecture and what change have happened, and what problems might happen. (I'm guessing this is going to be more in the $500-$1500/month range, so it's not really competing.)
Alternately, I would be willing to provide a manged service where the customer doesn't have root, except through my tools. Idea being that then all the systems I manage would be substantially similar. I could do this for dramatically less money, had I the time to dedicate to setting it up, and enough customers to make building the tools worth it.
I wish Linode much luck. As a competitor to their unmanaged product, I know I will be referring my customers who need more handholding to this service. There is a whole lot of need in the industry for managed services; VPSs are so cheap these days that people who have no ability or interest in systems administration want to buy them, and they need a lot of help.
My expectation? the customer will generally get a good deal for $100/month. But sometimes? it won't be enough, and that customer will go away very angry and (publicly) disappointed.